In the context of an application for leave to appeal on a question of law, Mr. Chief Justice Glenn D. Joyal in Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2021 MBQB 77, rejected Applicant’s attempt to adduce extensive affidavit material to reconstruct the arbitration’s evidentiary record limited by the parties’ procedural decisions not to (i) have a court reporter attend the hearing and prepare a transcript and (ii) mark documents as exhibits. Respondent argued the decisions were consistent with “the characteristics of commercial arbitration and the need for efficiency, cost effectiveness, confidentiality and finality” and afterwards Applicant could not “tender a selective and disputed evidentiary record” and seek a court’s review of alleged errors of law which necessarily require a complete evidentiary record. Joyal C.J. agreed and limited the record to the awards and reasons, five (5) exhibits and the pleadings. Joyal C.J. declined to assess the impact of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 but commented that he found “persuasive, certain aspects of the reasons and conclusions set forth” in Cove Contracting Ltd. v. Condominium Corporation No. 012 5598 (Ravine Park), 2020 ABQB 106 and Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516. Joyal C.J. observed “without deciding the issue, it need be acknowledged that it is anything but obvious that the Supreme Court of Canada intended Vavilov to apply to a statutory appeal of a commercial arbitration award and thereby overrule its own significant judgments in [Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), [2014] 2 SCR 633] and [Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 (CanLII), [2017] 1 SCR 688] along with the long-standing legal principles which acknowledge the reasons for limited judicial intervention in commercial arbitration.”
Christie Building Holding Company, Limited (“Christie”) and Shelter Canadian Properties Limited (“Shelter”) entered into a February 2012 Development Agreement (“Agreement”) and included an agreement for binding arbitration containing no right of appeal. Disputes arose between the parties and they engaged in arbitration which resulted in a June 17, 2020 award (“Award”) and an August 27, 2020 supplemental award (“Supplemental Award”). Joyal C.J. observed in his reasons that the Award and the Supplemental Award “were favourable in virtually every respect to the positions taken by Shelter”.
Christie filed two (2) applications seeking leave to appeal both the Award and the Supplemental Award (“Awards”) under section 44(2) of The Arbitration Act, CCSM c A120.
Joyal J. described the dispute as a “complex and extremely contentious commercial dispute” and sought to sketch the process by which the parties engaged in arbitration.
“The arbitration proceedings spanned over the course of 43 days between May 29, 2019 and January 29, 2020. The arbitrator was faced with the difficult task of resolving a multitude of highly contentious issues. The claims of Christie touched upon virtually every facet of a development project that had unfolded over more than seven years. Allegations of fraud, deceit, breach of fiduciary duties and bad faith had been made against Shelter”.
Joyal C.J. added an overview of the complex evidentiary record generated by the parties for resolution of the dispute in their arbitration.
“[15] To resolve these issues, the arbitrator heard and considered viva voce evidence from seven fact witnesses and two expert witnesses. Using electronic means, reference was made to an estimated 1,500 – 2,000 documents (e.g., emails, letters, agreements, notices, reports, schedules, etc.) over the course of the arbitration proceedings.
[16] During the arbitration, in almost every instance when a document was displayed on a television screen, the witness would comment and elaborate upon, and provide important context to, the document in question. A number of admissions were made by Christie’s fact witnesses while under cross-examination, which led to adverse findings against Christie and its principal, [K] see for example, paragraphs 216, 217, 347, 357, 366, 384, 390 and 480 of the Award).
[17] Printed copies of the documents referenced during the proceedings were later provided to the arbitrator in advance of closing arguments, but these documents were not marked as exhibits. A complete record of the documents referenced during the proceedings therefore was not created, and does not exist, apart from what might be recorded in the collections of notes made by the arbitrator and legal counsel”.
In support of Christie’s applications for leave to appeal, Christie filed the affidavit of its president, K, as well as some material appended to it. The affidavit and appendices drew Joyal C.J.’s attention and comment. In particular, K’s affidavit attached a variety of materials which Joyal C.J. understood as “an effort to address the matter of the record for the eventual leave applications”. Those materials included:
– a copy of Christie’s written argument to the arbitrator;
– various agreements with architects, engineers and contractors relating to the design and construction of the disputed project;
– 136 “key documents” which Joyal C.J. noted he was “left to presume reference was made during the course of the arbitration even if they were not marked as exhibits”;
– 219-page document “purporting to be a verbatim transcription of some questions asked and answers given during the direct and cross-examinations of some of the witnesses who testified during the arbitration proceedings”.
Shelter raised concerns that the 219-page document contained only those questions, answers and documents which Christie considered favourable to its case.
Contrary to Shelter, Christie argued that the record was not limited to the reasons in the Awards but ought to include the parties’ written argument and evidence submitted to the arbitrator. Christie reasoned that the filings selected by both it and Shelter are appropriate as “the requisite analysis could not otherwise be conducted on the basis of the arbitrator’s decisions alone”.
Joyal C.J. noted that, in support of its approach to submit the record provided by K’s affidavit, Christie relied on Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, though Joyal C.J. observed “despite the case’s origin in the area of administrative law and judicial review”.
“Christie insists that now, as a result of Vavilov, for any statutory appeal of an arbitration decision, the standard of review in respect of both the applications for leave and the appeal proper, is one of correctness. Christie says this in turn implies a need for a more expansive record for the purposes of the requisite review of the appellate grounds that Christie has pled”.
Joyal C.J. then recorded that Shelter “strenuously opposes Christie’s approach to recreating a record”, arguing that what constitutes a permissible record of the arbitration for the purposes of a leave to appeal application “should be neither dictated nor shaped by the grounds of appeal raised by Christie in its notices of application for leave”. Shelter rejected Christie’s interpretation of Vavilov and urged Joyal C.J. to “remain mindful” of the Supreme Court’s “more applicable, still recent and repeated direction that the scope of appellate intervention in commercial arbitration is narrow”. Shelter relied on Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), [2014] 2 SCR 633 para. 75 as particular argument in cases in which jurisdiction is limited to a question of law. Joyal C.J. also added referenced to Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 (CanLII), [2017] 1 SCR 688 para. 1.
“[10] Shelter insists that an evidentiary record of the arbitration proceeding was not created by design. Shelter argues that to now try to reconstruct a record after the fact — as Christie and [K] attempt to do — risks creating a situation which, from a practical perspective, would not only be impossible and extraordinarily expensive, but it would also invite a rehearing of all of the issues that were decided by the arbitrator thereby unjustifiably compromising the finality that the parties presumably wished to obtain in the arbitration process”.
Shelter urged that the record be limited to the Awards and the reasons for decision.
Joyal C.J. rejected Christie’s approach and limited the record to the Awards, five (5) exhibits marked as such in the arbitration, the pleadings and the reasons. The exhibits included these documents: two (2) expert reports; a transcript of a cross-examination on an affidavit; a document describing actuarial standards of practice; and, correspondence from the City of Winnipeg on a specific, discrete issue.
Arbitration process – In addition to the above comments on the process and evidentiary phase, Joyal C.J. noted that the parties “intentionally did not create an official transcription or record of the proceedings, it being the intent of the parties that the arbitration would remain private as between them and proceed without that added expense”.
Numerous printed documents provided to the arbitrator were not marked as exhibits. In response to the arbitrator’s request for an “Arbitration Record” the parties by agreement at the commencement of the arbitration provided only the pleadings. Joyal C.J. then recorded the role and use of the recordings made of the hearings.
“[21] In the weeks leading up to the commencement of the arbitration, the parties turned their minds to the issue of whether the proceedings should be recorded in some form for the benefit of counsel. It was thought that portions of the recordings could be useful to counsel for preparing their closing arguments. It was agreed that a digital audio recording would be made for each day of the proceedings with the assistance of staff at the Delta Hotel. At the end of each day, counsel were provided with a USB drive containing the recording for that day. The arbitrator was not provided with the digital files and, consequently, he did not review them as part of his deliberations. In total, approximately 250 hours of recordings exist on over 40 USB drives.
[22] While select portions of the recordings were typed out by the parties’ legal counsel and the notes were provided to the arbitrator as part of their closing arguments, this was done simply as a means of reminding the arbitrator what the parties believed a witness had said on a particular subject.
[23] Neither party purported that they were providing the arbitrator with a complete and accurate transcription of the proceedings, nor could they as it would have been inappropriate to do so. As neither of the Awards make any reference to the notes counsel had provided to the arbitrator during the course of closing arguments, it is unknown what use, if any, the arbitrator made of those notes”.
Joyal C.J. commented on different passages and aspects of the Award, noting that the Award was “detailed, comprehensive and analytical” and contained varying mentions about the arbitrator’s consideration of “all of the lengthy viva voce evidence and voluminous documentary evidence”.
When referring to the Award which issued first, Joyal C.J. noted that it was “apparent and, indeed, expressly stated in the decision, that the arbitrator’s findings and assessment of the evidence turned on the credibility and reliability of the witnesses”.
After flagging a comment in the Award to illustrate the arbitrator’s statement that “generally speaking, [he] found [K] to be unreliable in much of his testimony”, Joyal C.J. remarked that such a finding “cannot be disturbed on an appeal limited to a question of law”.
Joyal C.J. divided his analysis into three (3) sections:
(a) how choice to proceed at arbitration hearing without creating/preserving evidentiary record now leaves parties without any such evidentiary record (paras 35-40)
(b) absent an obvious evidentiary record, how are leave applications to be decided (paras 41-59)
(c) how, if at all, does Vavilov change the standard of review on appeals taken from arbitration decisions and if there is a resulting change, does it affect decision respecting appropriate record for leave applications and any eventual appeal (paras 61-83)
(a) choice to proceed without creating/preserving evidentiary record – Joyal C.J. identified two (2) procedural decisions taken by the parties which had consequences “unintended or not”: not to have a court reporter attend the hearing and prepare a transcript; not to mark documents as exhibits.
Shelter argued that the decisions were consistent with “the characteristics of commercial arbitration and the need for efficiency, cost effectiveness, confidentiality and finality” and that it was not open to a party afterwards to “tender a selective and disputed evidentiary record” and seek a court’s review of alleged errors of law which necessarily require a complete evidentiary record. Having summarized Shelter’s argument, Joyal C.J. remarked “I agree”.
Joyal C.J. considered Christie’s approach as an attempt to “relitigate many of the issues that were decided by the arbitrator” and agreed with Shelter that the “approximately 50 errors of law identified by Christie are for the most part, in reality, errors of fact and/or errors of mixed fact and law”. Though not seized of the appeal, Joyal C.J. did express that caution in light of the task which Christie’s applications suggest to him “inevitably” awaited the court: “permit the reconstruction of a record so as to provide Christie with an opportunity to identify the arbitrator’s misapprehension of the evidence or his conclusions based on the absence of evidence”.
(b) how to decide leave applications without “obvious” evidentiary record – Christie relied on a variety of case law, listed at para. 41 which would ostensibly support its approach for an expanded record. Joyal C.J. observed that, in addition to being “shaped by the specific facts and exceptions that may apply”, he distinguished them on a basis which appeared to anticipate a similar distinction he would make later when addressing Vavilov.
“While each of these cases are inevitably different from each other and are shaped by the specific facts and exceptions that may apply on the subject of when extrinsic evidence may be admitted to supplement a record, they all nonetheless relate to a judicial review, which by its nature, is distinct from an appeal arising from an arbitration where the decision maker was not an administrative tribunal sitting on behalf of an administrative body. Instead, an appeal from an arbitration is taken respecting an award made by a decision maker (the arbitrator) who is adjudicating a dispute that is private, which dispute is usually devoid of any public law component”.
Joyal C.J. also noted that the evidence adduced in those cases to fill an “evidentiary gap” addressed natural justice and not reassessment of fact-finding, “not to provide an evidentiary foundation for the reassessment of the evidence or to reassess the factual basis for the decision maker’s determinations, but rather, to demonstrate an impugned and flawed process or an issue of procedural unfairness”.
See Joyal C.J.’s further distinctions at para. 42 drawn on the arbitration before him.
Joyal C.J. relied on Fletcher v. Manitoba Public Insurance Corp. et al., 2008 MBCA 56 para. 9 to affirm that, for leave applications, “affidavits containing information beyond any official record are not to be tendered”. At paras 53-56, Joyal C.J. listed how a selective choice and presentation of documents “could unfairly affect, ex post facto, the integrity of this court’s review of [the arbitrator’s] comprehensive reasons”.
Wary of allowing a reconstructed record to expand a review into a de novo hearing, Joyal C.J. concluded that, among the “dangers posed”, the “most basic and foundational, is the concern that a review, whether on leave or on the merits, not take place on the basis of unjustifiably admitted extrinsic evidence which suddenly presents an evidentiary record that was not before the decision maker”.
(c) Vavilov – Joyal C.J. dutifully set out the competing lines of responses to Vavilov but decided not to join either approach. He opted to follow the path taken in Nolin v. Ramirez, 2020 BCCA 274 and confirm that the answer made no difference. That said, he did reserve the opportunity to revisit the impact of Vavilov if need be on the leave applications or the appeal. Before stating his option at paras 81-82, Joyal C.J. did offer his own thoughts on whether Vavilov applied to private commercial arbitration appeals.
“[74] While it is not at all clear that the question of the standard of review has to be decided for the purposes of resolving the issue respecting the record in the present case, to the extent that it later might become relevant, I will note that I find persuasive, certain aspects of the reasons and conclusions set forth in [Cove Contracting Ltd. v. Condominium Corporation No. 012 5598 (Ravine Park), 2020 ABQB 106] and [Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516]. I certainly accept as was noted in OLG that the Vavilov framework for the standard of review in the administrative law context, “derives from constitutional considerations that justify deference by the judiciary to the legislature” (at paragraph 72). Such a proposition in the context, is all the more meaningful when considering the connection to the public law dimension of administrative law, a dimension which is not obviously present nor applicable in the case of commercial arbitrations where the parties’ participation is consensual and dictated by private agreement.
[75] Again, without deciding the issue, it need be acknowledged that it is anything but obvious that the Supreme Court of Canada intended Vavilov to apply to a statutory appeal of a commercial arbitration award and thereby overrule its own significant judgments in Sattva and Teal Cedar Products Ltd. along with the long-standing legal principles which acknowledge the reasons for limited judicial intervention in commercial arbitration. If that had been the intention of the Supreme Court of Canada, it is reasonable to suggest that such an intention would have been more clearly and obviously stated in a case as significant as Vavilov”.
He then concluded as follows.
“[81] As clearly noted, I certainly acknowledge the existence of the current disagreement/debate in the lower courts across Canada since Vavilov concerning whether arbitration decisions are now subject to the appellate framework (with the applicable standards of appellate review) or whether they remain as before, subject to the reasonableness standard set out in Sattva and Teal Cedar Products Ltd.[2] That said, I find myself in the present case in a similar position to that of Bennett J.A. in Nolin v. Ramirez, 2020 BCCA 274. Although the court was not dealing with the issue of a record, Bennett J.A. did acknowledge the percolating and continuing debate as it relates to Vavilov’s application. Nonetheless, in a context where there remains an absence of a clear appellate court consideration of the issue, she noted as follows (at paragraph 39):
In my opinion, it makes no difference in this case whether the standard of review is reasonableness or palpable and overriding error, as the result would be the same. Since it is unnecessary to decide the obviously complex question, I will leave it to another day.
[82] As it relates to my specific determination respecting the record, I am of the same view as Bennett J.A. in Nolin v. Ramirez. In the present case, whatever the standard of review, it will not and should not change what is by necessity the very limited evidentiary record that is before me on the leave applications. Just as Christie’s formulated grounds of appeal alone cannot make admissible an otherwise inadmissible created/reconstructed evidentiary record where the integrity of the review makes it inappropriate to do so, neither should the identification of a particular standard of review”.
urbitral notes – First, for a sampling of other recent comments on the impact, if any, of Vavilov on appeals of commercial arbitrations, see the recent Arbitration Matters notes:
(i) “B.C. – court enforces parties’ choice to apply International Commercial Arbitration Act to employment disputes – #465” regarding Johnston v. Octaform Inc., 2021 BCSC 536 in which Mr. Justice Nigel P. Kent also declined to engage in determining Vavilov’s impact.
(ii) “Ontario – non-party witnesses applying to arbitrator to quash summonses do not attorn to jurisdiction – #462” regarding Bergmanis v. Diamond, 2021 ONSC 2375 in which Mr. Justice William S. Chalmers, relying Ontario First Nations (2008) Limited Partnership v. Ontario Lottery And Gaming Corporation, 2020 ONSC 1516, held that Vavilov did not modify the standard of review.
(iii) “Alberta – “surrounding circumstances” for contract interpretation exclude subjective intentions – #460” regarding 719491 Alberta Inc. v. The Canada Life Assurance Company, 2021 ABQB 226 in which Mr. Justice W. Patrick Sullivan, in obiter, endorsed the concurring three (3)’s approach in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 to apply Vavilov to appeals of commercial arbitration awards.
(iv) “Ontario – jurisdiction involves whether arbitrator has authority to make inquiry, not the answer to the inquiry – #458” regarding Parc-IX Limited v. The Manufacturer’s Life Insurance Company, 2021 ONSC 1252 in which Mr. Justice Markus Koehnen noted differing treatments of Vavilo but supported applying the correctness standard to a review of an arbitrator’s award for reasons set out at para. 72 of Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation.